By Jody Coultas, J.D.
The Department of Justice has asked the Supreme Court to let stand a Second Circuit ruling that the government failed to prove that "anti-steering" rules that prohibited merchants who accepted American Express cards from directing customers to alternative credit card brands violated Section 1 of the Sherman Act (State of Ohio v. American Express Company, Dkt. 16-1454).
In 2010, the Justice Department and 17 states filed suit against the country’s three largest credit and charge card transaction networks. A February 2015 decision of the federal district court in Brooklyn, New York, in favor of the Justice Department and the states, and an order prohibiting Amex from enforcing these nondiscriminatory provisions (NDPs) in contracts with merchants, were reversed and remanded by the Second Circuit in September 2016, with instructions to enter judgment in favor of Amex.
In June, 11 states filed a petition seeking review of the ruling, but the Justice Department declined to participate. The petition asked: "Under the ‘rule of reason,’ did the government’s showing that Amex’s anti-steering provisions stifled price competition on the merchant side of the credit-card platform suffice to prove anticompetitive effects and thereby shift the burden of establishing any procompetitive benefits from the provisions?" Although the Justice Department declined to participate, Ahold U.S.A. Inc., economist John M. Connor, Discover, Retail Litigation Center, former federal antitrust officials, Southwest Airlines, and the U.S. Public Interest Research Group Education Fund filed briefs in support of the petition.
In its brief in opposition, the Justice Department is asking the High Court to reject the States’ petition, arguing that the case does not satisfy the Court’s traditional certiorari standards. While the Justice Department agrees with the States that the district court’s findings established a prima facie case that the anti-steering rules unreasonably restrain trade, and that the court of appeals had erred in holding otherwise, it nevertheless argues against the Court taking the cases. Specifically, the Justice Department argues that the 2nd Circuit’s decision was based almost entirely on the "two-sided" nature of the credit-card industry, and neither the Supreme Court nor any other circuit had squarely considered the application of the antitrust laws to two-sided platforms, as such. Therefore, the Court should await further percolation in the lower courts before taking up such a novel legal issue.
For details about these and other petitions and cases pending before the Supreme Court, please consult the chart of Supreme Court opinions and petitions.
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